Photo by: Duane Daws
German premium automaker BMW this week confirmed that it was well advanced in its planning for the production of a new model at its South African plant, set to kick off when the current 3 Series reached the end of its life cycle.
BMW was steadily “progressing to an announcement”, said BMW sales and marketing management board member Ian Robertson in Frankfurt on Tuesday.
“South Africa is an integral part of our network. It has delivered on everything we have set out to achieve.”
BMW Group South Africa (SA) currently produced the 3 Series for the local and export markets at its Rosslyn plant, in Pretoria. The group had assembled 68 771 3 Series vehicles last year, around 62 000 of which were exported to markets such as China, the US, South Korea, Australia, Japan and Canada.
This had been a record for the company, and a 17% jump over 2013 exports.
The current 3 Series was launched in South Africa in 2012.
Manufacturing plans for the Rosslyn plant could either revolve around the future 3 Series and/or another model.
Robertson noted, however, that adding a second model to the current one-model production line-up would be unlikely.
“Never say never, but the investment requirements have to make sense. If you go for a second model you need to invest more and tool up for that second model. From that perspective it is less likely.”
There also remained some challenges to vehicle production in South Africa, especially in terms of labour unrest, added Robertson.
Robertson was a previous MD of BMW Group SA, and also served five years as president of the National Association of Automobile Manufacturers of South Africa.
Stalled wage talks in 2013 led to an eight-week motor industry strike, which saw BMW Group SA tally 13 000 vehicles in lost production, as well as lose out on the opportunity to produce a second model at the Rosslyn plant.
Robertson said BMW had been forced to move production to other plants during past strike events in South Africa.
“It is important, as we move forward, that surety of supply is part of the discussion.
“A customer does not really care where the product comes from. If a customer wants a 3 Series, he wants a 3 Series. He is not interested in a problem at one of our factories. We have to make that clear in our thinking.”
Robertson noted, however, that a decision on future production in South Africa was not linked to fresh automotive industry wage negotiations, scheduled for 2016, or the fact that the review of government’s Automotive Production and Development Programme (APDP) had not yet been finalised.
The APDP was currently set to end in 2020, even if government had provided assurance that the review would see the extension of the support programme beyond this date.
Neither did the current tussle between the American and South African governments on the African Growth and Opportunity Act (Agoa) play a role, even if Agoa provided significant benefits to BMW Group SA, noted Robertson.
BMW Group SA exported around 40 000 3 Series units to the US in 2014.
Robertson believed that Agoa provided Africa with much preferred market access, rather than hand-outs.
“It is a very successful way to assist growth. Countries can either rise to the challenge or not.
“I hope [the current negotiations] reach a satisfactory conclusion. It is in everyone’s interest. Clearly Agoa gives our South African operations an advantage over our German operations.
“[But] if you are dependent on decisions such as these, you don’t have a good business case.”
“Plant Rosslyn is very competitive within the global BMW production network,” added BMW Group SA MD Tim Abbott.
“Our associates are highly skilled professionals who have just been awarded the Platinum Award by JD Power for producing the best cars in the world. Plant Rosslyn has an impressive 42 years history for BMW in South Africa and is here to stay.”
Robertson noted that BMW was not currently looking at establishing other production sites in Africa.